The government on Monday announced a banks-led, five-pronged, comprehensive plan \u2014 Sashakt \u2014 for the resolution of stressed assets with public-sector banks (PSBs), including creation of one or more widely held asset management companies for loans above Rs 500 crore. The plan doesn\u2019t involve regulatory forbearance or an immediate government involvement, finance minister Piyush Goyal said. Though the committee headed by Punjab National Bank non-executive chairman Sunil Mehta refrained from proposing a \u2018bad bank\u2019, it said in case of large stressed accounts \u2014 there are over 200 amounting to Rs 3.1 lakh crore with exposure spread across multiple banks \u2014 an alternative investment fund (AIF) would raise funds from institutional investors. Banks also have an option to invest in the fund if they wish to participate in the upside. In case these high-value assets are to be sold, the price discovery would be through open auction by the lead bank and the idea is that AMC\/AIF would become a market-maker capable of ensuring fair price and cash recovery. The security receipts could be redeemed within 60 days. The AMC\/AIF could steer the turnaround themselves or engage external parties. For mid-sized bad assets ( between Rs 50 crore and Rs\u00a0 500 crore) \u2014 which are of similar aggregate size as of the large ones \u2014 there will be a purely banks-led resolution approach under which they would enter into an inter-creditor agreement to authorise the lead bank to implement it in 180 days. The lead bank will then prepare a plan and may involve turnaround specialists and industry experts in its implementation. If 66% of the lenders approve a plan, it could be worked out, akin to a similar threshold for insolvency proceedings under the Insolvency and Bankrutpcy Code. In case the lead bank fails to complete the resolution process in 180 days, the asset would be referred to the National Company Law Tribunal for insolvency proceedings. Gross non-performing assets (NPAs) with the banking system hit as high as `8.99 lakh crore as of December 2017, or 10.11% of total advances. Around 85% of these bad loans were with the PSBs. As many as 11 of the 21 PSBs are under the central bank\u2019s prompt corrective action (PCA) framework. What worries analysts is that the net NPAs of the five PCA-banks were uncomfortably high at the end of March 2018. These are IDBI Bank (net NPA ratio of 16.69%), United Bank of India (16.49%), Indian Overseas Bank (15.33%), Dena Bank (11.95%) and Bank of Maharashtra (11.76%). The 11 stressed banks make up for 30% of deposits and 29% of advances of all the 21 PSBs. The bankers\u2019 panel, chaired by Mehta, was set up in early June to look at the feasibility of an AMC or asset reconstruction company to address the stressed asset issue. The Reserve Bank of India has already warned that the bad loans could rise further over the coming quarters. The gross NPA ratio of scheduled commercial banks could rise to 12.2% by March 2019 from 11.6% in March 2018, said the RBI.